DNOW Inc.

Previous wording

DNOW is a holding company headquartered in Houston, Texas that was incorporated in Delaware on November 22, 2013. We operate primarily under the DNOW and MRC Global brands along with several affiliated brands operating in local, regional or international markets that are tied to prior acquisitions.

Current wording

DNOW is a holding company headquartered in Houston, Texas that was incorporated in Delaware on November 22, 2013. We operate primarily under the DNOW and MRC Global brands along with several affiliated and acquired brands operating in local, regional or international markets.

Previous wording

We are a premier provider of energy and industrial solutions with a legacy of over 160 years as a global leader in the distribution of PVF, gas products, pumps and fabricated process and production equipment and a wide range of MRO consumables and related products. We operate across diversified sectors of the energy value chain and industrial end-markets, including:

Current wording

We are a premier provider of energy and industrial solutions with a legacy of over 160 years as a leading distributor of PVF, gas products, pumps and fabricated process and production equipment and a wide range of MRO consumables and related products. We operate across diversified sectors of the energy value chain and industrial end-markets, including:

Previous wording

Upstream: exploration, production and extraction of oil and gas, as well as the use and disposal of produced water

Current wording

Upstream: exploration, production and extraction of oil and gas, as well as the use, transfer and disposal of produced water

Previous wording

We offer a comprehensive portfolio of products, including an extensive array of PVF, gas products, valve automation, valve modification, gaskets, fasteners, electrical components, instrumentation, artificial lift, pumping systems, process and production equipment, production measurement technology, MRO consumables and a variety of both general and specialty products. Our team of approximately 5,200 employees support our customers through approximately 300 strategic locations including regional distribution centers, super centers, branches and corporate offices.

Current wording

Our comprehensive products and solutions offerings includes an extensive array of PVF, gas products, pumps, fabricated equipment, valve automation, valve modification, gaskets, fasteners, electrical components, measurement, instrumentation, artificial lift, pumping systems, process and production equipment, production measurement technology, MRO consumables and other general and specialty products. Our team of approximately 5,100 employees support our customers through approximately 300 strategic locations including regional distribution centers, super centers, branches and corporate offices.

Previous wording

Oil and Natural Gas Demand and Prices. Sales of PVF and infrastructure products to the oil and natural gas industry constitute a significant portion of our sales. As a result, we depend upon the maintenance and capital expenditures of oil and natural gas companies to explore for, extract, produce and process oil, natural gas and refined products. Demand for oil and natural gas, current and projected commodity prices and the costs necessary to produce oil and gas impact customer capital spending, additions to and maintenance of pipelines, refinery utilization and petrochemical processing activity. Additionally, as these participants rebalance their capital investment away from traditional, carbon-based energy toward alternative sources, we expect to continue to supply them and enhance our product and service offerings to support their changing requirements, including in areas such as carbon capture utilization and storage, biofuels, RNG, offshore wind and hydrogen processing.

Current wording

Oil and Natural Gas Demand and Prices. Sales of PVF and infrastructure products to the oil and natural gas industry constitute a significant portion of our sales. As a result, we depend upon the maintenance and capital expenditures of oil and natural gas companies to explore for, extract, produce and process oil, natural gas and refined products. Demand for oil and natural gas, current and projected commodity prices and the costs necessary to produce oil and natural gas impact customer capital spending, additions to and maintenance of pipelines, refinery utilization and petrochemical processing activity. Additionally, as some of these participants rebalance their capital investment away from traditional, carbon-based energy toward alternative sources, we expect to continue to supply them and enhance our product and service offerings to support their changing requirements, including in areas such as carbon capture utilization, sequestration and storage, biofuels, RNG, offshore wind and hydrogen processing.

Previous wording

Recent geopolitical developments, including military conflict involving Iran, have contributed to increased volatility in global energy markets, financial markets and international supply chains. While the full impact of these conditions continues to evolve, management is actively monitoring potential effects on customer demand, costs, logistics and overall macroeconomic conditions. Oil and gas producers have generally remained disciplined in their capital expenditures and have generally not increased production beyond their ability to fund their expenditures from prudent borrowings and cash flow from operations. We expect this trend to continue.

Current wording

Recent geopolitical developments, including military conflict involving Iran, have contributed to increased volatility in global energy markets, financial markets and international supply chains. While the full impact of these conditions continues to evolve, management is actively monitoring potential effects on customer demand, costs, logistics and overall macroeconomic conditions. The majority of our publicly traded oil and gas producer customers have generally remained disciplined in their capital expenditures and have generally not increased production beyond their ability to fund their expenditures from prudent borrowings and cash flow from operations. We expect this trend to continue.

Previous wording

The U.S. Supreme Court has now invalidated the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs. The overall impact on tariffs is unknown at this time. The administration has already relied on other statutory authorities to maintain or adjust tariffs, and those sector-specific tariffs remain fully in effect. Notably, Section 232 tariffs on steel and aluminum remain in effect.

Current wording

The U.S. Supreme Court has invalidated the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs. The overall impact on IEEPA tariffs had been limited, as the administration quickly enacted or announced other statutory authorities to maintain or adjust tariffs. Besides the Section 232 tariffs on steel and aluminum noted above, Section 122 and 301 tariffs, along with pointed anti-dumping and countervailing duties, have been imposed to varying degrees.

Previous wording

The Upstream sector of our business includes the traditional exploration, production and extraction of oil and gas, as well as the use and disposal of produced water, and is the most cyclical of our markets. In the three months ended March 31, 2026, this sector represented 39% of ourtotal Company revenue. The Upstream sector revenue increased 12% in the three months ended March 31, 2026 compared to the corresponding period of 2025. During the three months ended March 31, 2026, West Texas Intermediate (“WTI”) oil prices averaged $71.98 per barrel, up 0.2% from the corresponding period of 2025. Natural gas prices also drive customer activity and have experienced volatility but increased throughout 2025, driven by climate and seasonal weather patterns, increased LNG exports and lower storage levels.

Current wording

The Upstream sector of our business includes the traditional exploration, production and extraction of oil and gas, as well as the use, transfer and disposal of produced water, and is the most cyclical of our markets. In the six months ended June 30, 2026, this sector represented 39% of ourtotal Company revenue. The Upstream sector revenue increased 17% in the six months ended June 30, 2026 compared to the corresponding period of 2025. During the six months ended June 30, 2026, West Texas Intermediate (“WTI”) oil prices averaged $83.87 per barrel, up 22.9% from the corresponding period of 2025. Natural gas prices also drive customer activity and have experienced volatility but increased throughout 2025, driven by climate and seasonal weather patterns, increased LNG exports and lower storage levels.

Previous wording

Recent industry reports have projected flat to lower upstream customer spending levels in 2026, due to current supply and demand projections. We also expect our larger public customers will remain disciplined and consistent with their commitments to their budgets, maintaining returns to their shareholders and operating within their cash flow requirements. Despite this, we expect opportunities for revenue synergies from cross-selling products related to our acquisitions will support growth in this sector. We also expect incremental growth in water management and disposal solutions, supported by our Flex Flow and Trojan offerings, as customers seek to optimize operating costs and manage produced water volumes more effectively.

Current wording

Recent industry reports have projected flat to lower upstream customer spending levels in 2026, due to current supply and demand projections. We also expect majority of our publicly traded oil and gas producer customers will remain disciplined and consistent with their commitments to their budgets, maintaining returns to their shareholders and operating within their cash flow requirements. Despite this, we expect opportunities for revenue synergies from cross-selling products related to our acquisitions will support growth in this sector. We also expect incremental growth in water management and disposal solutions, supported by our Flex Flow, Trojan and Edge Controls offerings, as customers seek to optimize operating costs and manage produced water volumes more effectively.

Previous wording

The Gas Utilities sector contributed 23% of our total Company revenue in the three months ended March 31, 2026, and will represent a greater proportion of revenue in the future following the November 2025 acquisition of MRC Global. Market growth fundamentals of this sector are positive due to the demand for natural gas, distribution integrity upgrade programs as well as new home construction in certain U.S. states. The majority of the work we perform with our gas utility customers are multi-year programs where they continually evaluate, monitor and implement measures to improve their pipeline distribution networks, ensuring the safety and the integrity of their system. As of 2025, which is the most recently available information, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) estimates approximately 33% of the gas distribution main and service line miles are over 40 years old or of unknown origin. This infrastructure requires continuous replacement and maintenance as these gas distribution networks continue to age. We supply many of the replacement products including valves, line pipe, smart meters, risers and other gas products. A large percentage of the line pipe we sell is sold to our gas utilities customers for line replacement and new sections of their distribution network. As our gas utility customers connect new homes and businesses to their gas distribution network, the growth in the housing market creates new revenue opportunities for our business to supply the related infrastructure products. Some of our customers in this sector support both gas and electric distribution, and certain customers have announced allocating a higher proportion of their capital budget to electric distribution. However, based on market fundamentals, the need for natural gas to fuel new electric generation facilities and new market share opportunities, we expect the Gas Utilities sector to continue to have steady growth in the coming years. Additionally, due to its reduced dependency on energy demand and commodity prices, this sector is less volatile than the others.

Current wording

The Gas Utilities sector contributed 23% of our total Company revenue in the six months ended June 30, 2026, and we expect revenue from this sector to increase in future periods following the November 2025 acquisition of MRC Global. Market growth fundamentals of this sector are positive due to the demand for natural gas, distribution integrity upgrade programs as well as new home construction in certain U.S. states. The majority of the work we perform with our gas utility customers are multi-year programs where they continually evaluate, monitor and implement measures to improve their pipeline distribution networks, ensuring the safety and the integrity of their system. As of 2025, which is the most recently available information, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) estimates approximately 33% of the gas distribution main and service line miles are over 40 years old or of unknown origin. This infrastructure requires continuous replacement and maintenance as these gas distribution networks continue to age. We supply many of the replacement products including valves, line pipe, smart meters, risers and other gas products. A large percentage of the line pipe we sell is sold to our gas utilities customers for line replacement and new sections of their distribution network. As our gas utility customers connect new homes and businesses to their gas distribution network, the growth in the housing market creates new revenue opportunities for our business to supply the related infrastructure products. Some of our customers in this sector support both gas and electric distribution, and certain customers have announced allocating a higher proportion of their capital budget to electric distribution. However, based on market fundamentals, the need for natural gas to fuel new electric generation facilities and new market share opportunities, we expect the Gas Utilities sector to continue to have steady growth in the coming years. Additionally, due to its reduced dependency on energy demand and commodity prices, this sector is less volatile than the others.

Previous wording

Downstream and Industrial sector generated 20% of our total Company revenue in the three months ended March 31, 2026. We expect this sector to deliver strong growth in the coming years driven by increased customer activity levels related to maintenance, repair and operations (“MRO”) activities, project turnaround activity in refineries and chemical plants and new energy transition related projects. Additionally, we have expanded into new markets, including mining and data centers. We are also negotiating master service agreements with targeted owners and subcontractors for PVF work in new data center cooling systems. While still early, we are seeing encouraging momentum in both areas. This sector has a significant amount of project activity, which can create substantial variability between quarters.

Current wording

Downstream and Industrial sector generated 18% of our total Company revenue in the six months ended June 30, 2026. We expect this sector to deliver strong growth in the coming years driven by increased customer activity levels related to maintenance, repair and operations (“MRO”) activities, project turnaround activity in refineries and chemical plants and new energy transition related projects. Additionally, we have expanded into new markets, including mining and data centers. We are also negotiating master service agreements with targeted owners and subcontractors for PVF work in new data center cooling systems. While still early, we are seeing encouraging momentum in both areas. This sector has a significant amount of project activity, which can create substantial variability between quarters.

Previous wording

The outlook for energy transition projects within the Downstream and Industrial sector is supported by government incentives and policies. Many of our customers have made commitments to net zero emissions to address climate change. Our customer base represents many of the primary leaders in the energy transition movement, and they are positioned to lead the effort to decarbonize through nearer-term efforts such as renewable or biodiesel refineries and offshore wind power generation as well as longer-term efforts such as carbon capture and storage and hydrogen. However, as U.S. government support is waning for these projects even while European government support continues, we are monitoring our customers' plans for, and the pace of development of, these projects.

Current wording

The outlook for energy transition projects within the Downstream and Industrial sector is supported by government incentives and policies. Many of our customers have made commitments to net zero emissions to address climate change. Our customer base represents many of the primary leaders in the energy transition movement, and they are positioned to lead the effort to decarbonize through nearer-term efforts such as renewable or biodiesel refineries and offshore wind power generation as well as longer-term efforts such as carbon capture, sequestration and storage and hydrogen. However, as U.S. government support is waning for these projects even while European government support continues, we are monitoring our customers' plans for, and the pace of development of, these projects.

Previous wording

DNOW’s Midstream sector is primarily U.S. based and driven by the increased demand for pipelines and gathering systems. In the three months ended March 31, 2026, this sector represented 18% of our total Company revenue. The Midstream sector revenue increased 70% in the three months ended March 31, 2026 compared to the corresponding period of 2025. The outlook in 2026 is expected to have growth primarily driven by demand for natural gas infrastructure as LNG exports continue to rise and gas fired power generation increases for data centers. This market driver is anticipated to positively impact the Midstream sector, contributing to growth. The revenue profile for this sector tends to be volatile between quarters, as it can often be tied to large projects.

Current wording

DNOW’s Midstream sector is primarily U.S. based and driven by the increased demand for pipelines and gathering systems. In the six months ended June 30, 2026, this sector represented 20% of our total Company revenue. The Midstream sector revenue increased 71% in the six months ended June 30, 2026 compared to the corresponding period of 2025 primarily as a result of the acquisition of MRC Global in November 2025. The outlook in 2026 is expected to have growth primarily driven by demand for natural gas infrastructure as LNG exports continue to rise and gas fired power generation increases for data centers. According to a 2025 Interstate Natural Gas Association of American ("INGAA") Foundation report, to meet energy demand through 2052, North America will require more than $1 trillion in capital investment across natural gas, oil, natural gas liquids, hydrogen and CO 2 infrastructure, averaging $40 billion to $48 billion annually, varying by investment. This market driver is anticipated to positively impact our Midstream sector, contributing to opportunities for growth. The revenue profile for this sector tends to be volatile between quarters, as it can often be tied to large projects.

Previous wording

Our results are dependent on, among other factors, the level of worldwide oil and gas drilling and completions, well remediation activity, crude oil and natural gas prices, capital spending by oilfield service companies and drilling contractors, and the worldwide oil and gas inventory levels. Key industry indicators for the first quarter of 2026 and 2025 and the fourth quarter of 2025 include the following:

Current wording

Our results are dependent on, among other factors, the level of worldwide oil and gas drilling and completions, well remediation activity, crude oil and natural gas prices, capital spending by oilfield service companies and drilling contractors, and the worldwide oil and gas inventory levels. Key industry indicators for the second quarter of 2026 and 2025 and the first quarter of 2026 include the following:

Previous wording

The following table details the U.S., Canadian and international rig activity and West Texas Intermediate oil prices for the past nine quarters ended March 31, 2026. During the third quarter of 2025, Baker Hughes’s methodology for calculating rig counts in the Kingdom of Saudi Arabia has been updated effective for periods beginning January 2024. As a result, previously reported international rig counts have been recast to conform to the updated methodology.

Current wording

The following table details the U.S., Canadian and international rig activity and West Texas Intermediate oil prices for the past nine quarters ended June 30, 2026. In the third quarter of 2025, Baker Hughes’s methodology for calculating rig counts in the Kingdom of Saudi Arabia has been updated effective for periods beginning January 2024. As a result, previously reported international rig counts have been recast to conform to the updated methodology.

Previous wording

The worldwide quarterly average rig count increased 1.8% (from 1,799 rigs to 1,832 rigs) and the U.S. remained flat (at 548 rigs) in the first quarter of 2026 compared to the fourth quarter of 2025. The average price per barrel of WTI Crude increased 20.7% (from $59.64 per barrel to $71.98 per barrel), and average natural gas prices increased 27.7% (from $3.75 per MMBtu to $4.79 per MMBtu) in the first quarter of 2026 compared to the fourth quarter of 2025. The average price per short ton of Hot-Rolled Coil increased 11.4% (from $828.78 per short ton to $923.51 per short ton) in the first quarter of 2026 compared to the fourth quarter of 2025. U.S. Wells Completed declined 5.6% (from 3,055 completion count to 2,885 completion count) in the first quarter of 2026 compared to the fourth quarter of 2025.

Current wording

The worldwide quarterly average rig count declined 3.9% (from 1,832 rigs to 1,760 rigs) and the U.S. increased 1.1% (from 548 to 554 rigs) in the second quarter of 2026 compared to the first quarter of 2026. The average price per barrel of WTI Crude increased 33.0% (from $71.98 per barrel to $95.75 per barrel), and average natural gas prices declined 38.4% (from $4.79 per MMBtu to $2.95 per MMBtu) in the second quarter of 2026 compared to the first quarter of 2026. The average price per short ton of Hot-Rolled Coil increased 13.2% (from $923.51 per short ton to $1,045.84 per short ton) in the second quarter of 2026 compared to the first quarter of 2026. U.S. Wells Completed increased 2.5% (from 2,943 completion count to 3,018 completion count) in the second quarter of 2026 compared to the first quarter of 2026.

Previous wording

We play a vital role in supporting customers’ supply chains, providing essential products for energy and industrial markets, including infrastructure across upstream, gas utilities, midstream, downstream, energy transition and industrial sectors. Our business depends on both capital and maintenance spending by our customers. Global oil and gas consumption is rising due to population growth and expanding energy needs in emerging markets. The EIA projects world energy consumption to increase 34% between 2022 and 2050, with significant growth in renewables (118%), natural gas (29%) and hydrocarbon-based liquids (23%). U.S. oil production is expected to peak at 14 million barrels per day in 2028 and gradually decline, while natural gas production will grow, largely driven by LNG expansion and power generation. The gas utilities industry is expected to grow as aging distribution networks prompt replacement and modernization. PHMSA estimates that roughly 33% of gas distribution lines are over 40 years old or of unknown origin, driving ongoing maintenance. Housing market growth further increases demand for related infrastructure products. According to the EIA, the U.S. will remain a net exporter of petroleum products due to expanded terminal capacity, with strong markets for our goods and services. This projected increase in oil and gas to meet the rise in international energy demand continues to provide a robust market for our existing goods and services. We anticipate future growth from energy transition projects, as traditional energy customers shift capital to these areas. Our established relationships and experience position us well for this evolving market. The U.S. midstream sector is expanding, particularly in natural gas infrastructure to meet LNG export and power demands. Federal policies have accelerated project reviews and simplified processes for pipeline development. Globally, refining capacity—especially in Asia and the Middle East—is projected to outpace demand growth later in the decade; the U.S. market remains stable but faces planned capacity reductions. As refineries age or convert to renewable fuels, we supply critical infrastructure for continued operations and conversions. The U.S. chemicals market is expected to grow steadily, while short term cycles will exist, and remain globally competitive through 2040, due to feedstock cost advantage from shale gas and natural gas liquids (“NGLs”). The European market is transitioning toward specialty and sustainable chemicals with commodity chemicals declining. Demand for our products is shaped by operational budgets, capacity expansions, and compliance needs.

Current wording

We play a vital role in supporting customers’ supply chains, providing essential products for energy and industrial markets, including infrastructure across upstream, gas utilities, midstream, downstream and industrial sectors. Our business depends on both capital and maintenance spending by our customers. Global oil and gas consumption is rising due to population growth and expanding energy needs in emerging markets. The EIA projects world energy consumption to increase 34% between 2022 and 2050, with significant growth in renewables (118%), natural gas (29%) and hydrocarbon-based liquids (23%). U.S. oil production is expected to peak at 14 million barrels per day in 2028 and gradually decline, while natural gas production will grow, largely driven by LNG expansion and power generation. The gas utilities industry is expected to grow as aging distribution networks prompt replacement and modernization. PHMSA estimates that roughly 33% of gas distribution lines are over 40 years old or of unknown origin, driving ongoing maintenance. Housing market growth further increases demand for related infrastructure products. According to the EIA, the U.S. will remain a net exporter of petroleum products due to expanded terminal capacity, with strong markets for our goods and services. This projected increase in oil and gas to meet the rise in international energy demand continues to provide a robust market for our existing goods and services. We anticipate future growth from energy transition projects, as traditional energy customers shift capital to these areas. Our established relationships and experience position us well for this evolving market. The U.S. midstream sector is expanding, particularly in natural gas infrastructure to meet LNG export and power demands. Federal policies have accelerated project reviews and simplified processes for pipeline development. According to a 2025 INGAA Foundation report, to meet energy demand through 2052, North America will require more than $1 trillion in capital investment across natural gas, oil, natural gas liquids, hydrogen and CO 2 infrastructure, averaging $40 billion to $48 billion annually, varying by investment. Globally, refining capacity—especially in Asia and the Middle East—is projected to outpace demand growth later in the decade; the U.S. market remains stable but faces planned capacity reductions. As refineries age or convert to renewable fuels, we supply critical infrastructure for continued operations and conversions. The U.S. chemicals market is expected to grow steadily, while short term cycles will exist and remain globally competitive through 2040, due to feedstock cost advantage from shale gas and natural gas liquids (“NGLs”). The European market is transitioning toward specialty and sustainable chemicals with commodity chemicals declining. Demand for our products is shaped by operational budgets, capacity expansions, and compliance needs.

Previous wording

Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. For a reconciliation of these measures to an equivalent GAAP measure, see pages 24-25 herein.

Current wording

Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. For a reconciliation of these measures to an equivalent GAAP measure, see pages 26-28 herein.

Previous wording

Revenue. Our revenue was $1,183 million for the three months ended March 31, 2026, compared to $599 million for the corresponding period of 2025, an increase of $584 million or 97.5%.

Current wording

Revenue. Our revenue was $1,307 million and $2,490 million for the three and six months ended June 30, 2026 as compared to $628 million and $1,227 million for the corresponding periods of 2025, an increase of $679 million, or 108.1%, and an increase of $1,263 million, or 102.9%, respectively.

Previous wording

U.S. Segment—Revenue was $985 million for the three months ended March 31, 2026, an increase of $511 million or 107.8% compared to the corresponding period of 2025. The increase was primarily driven by incremental revenue from the MRC Global acquisition completed in the fourth quarter of 2025.

Current wording

U.S. Segment—Revenue was $1,109 million and $2,094 million for the three and six months ended June 30, 2026, an increase of $581 million and an increase of $1,092 million compared to the corresponding periods of 2025. Theincrease for the three and six months ended June 30, 2026 was primarily driven by incremental revenue from the MRC Global acquisition completed in the fourth quarter of 2025.

Previous wording

Canada Segment—Revenue was $51 million for the three months ended March 31, 2026, a decrease of $11 million or 17.7% compared to the corresponding period of 2025. The decrease was primarily due to lower project-related activity.

Current wording

Canada Segment—Revenue was $47 million and $98 million for the three and six months ended June 30, 2026, a decrease of $1 million, or 2.1% and a decrease of $12 million, or 10.9%, compared to the corresponding periods of 2025. For the six months ended June 30, 2026, the decrease was primarily due to lower project-related activity.

Previous wording

Our Canadian revenue was approxim ately 4% of total revenue for the three months ended March 31, 2026, compared to 10% for the three months ended March 31, 2025. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our Canadian revenue is favorably impacted as the U.S. dollar weakens relative to the Canadian dollar, and unfavorably impacted as the

Current wording

Our Canadian revenue was approxim ately 4% of total revenue for both the three and six months ended June 30, 2026, compared to 8% and 9% for the three and six months ended June 30, 2025, respectively. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our Canadian revenue is favorably impacted as the U.S. dollar weakens relative to the Canadian dollar, and unfavorably impacted as the U.S. dollar strengthens relative to the Canadian dollar. For the three and six months ended June 30, 2026, our Canadian segment revenuewas unfavorably impacted by less than $1 million and favorably impacted by approximately $2 million, respectively, due to changes in foreign currency exchange rates.

Previous wording

International Segment—Revenue was $147 million for the three months ended March 31, 2026, an increase of $84 million or 133.3% compared to the corresponding period of 2025. The increase was primarily due to the acquisition of MRC Global in the fourth quarter of 2025.

Current wording

International Segment—Revenue was $151 million and $298 million for the three and six months ended June 30, 2026, an increase of $99 million and an increase of $183 million compared to the corresponding periods of 2025. Theincrease was primarily due to the acquisition of MRC Global in the fourth quarter of 2025.

Previous wording

Our international revenue was approx imately 13% of total revenue for the three months ended March 31, 2026, compared to 11% for the three months ended March 31, 2025. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our international revenue is favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. Our international segment revenue was favorably impacted by approximately $3 million due to changes in foreign currency exchange rates over the prior year.

Current wording

Our international revenue was approx imately 11% and 12% of total revenue for the three and six months ended June 30, 2026, compared to 8% and 9% for the three and six months ended June 30, 2025, respectively. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our international revenue is favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. For the three and six months ended June 30, 2026, our international segment revenue was favorably impacted by approximately $1 million and $4 million, respectively, due to changes in foreign currency exchange rates.

Previous wording

Gross Profit. Our gross profit was $193 million (16.3% of revenue) for the three months ended March 31, 2026, compared to $138 million (23.0% of revenue) for the three months ended March 31, 2025. The $55 million increase was primarily attributable to an increase in revenue due to the acquisition of MRC Global in November 2025. Compared to average cost, our LIFO inventory costing methodology increased cost of products by $16 million for the three months ended March 31, 2026, compared to a $1 million increase in cost of products for the three months ended March 31, 2025.

Current wording

Gross Profit. Our gross profit was $243 million (18.6% of revenue) and $436 million (17.5% of revenue) for the three and six months ended June 30, 2026, respectively, as compared to $129 million (20.5% of revenue) and $267 million (21.8% of revenue) for the three and six months ended June 30, 2025, respectively. The increase was primarily attributable to incremental revenue due to the acquisition of MRC Global in November 2025. Compared to average cost, our LIFO inventory costing methodology increased cost of products by $19 million and $35 million for the three and six months ended June 30, 2026, respectively, as compared to a $15 million and $16 million increase in cost of products for the three and six months ended June 30, 2025, respectively.

Previous wording

Adjusted Gross Profit. Adjusted Gross Profit increased to $256 million (21.6% of revenue) for the three months ended March 31, 2026 from $141 million (23.5% of revenue) for the three months ended March 31, 2025, an increase of $115 million. The increase was primarily driven by the U.S. and International segments, partially offset by the Canada segment. The reduced margin percentage is primarily driven by the impact of MRC Global contributions.

Current wording

Adjusted Gross Profit. Adjusted Gross Profit increased to $272 million (20.8% of revenue) and $528 million (21.2% of revenue) for the three and six months ended June 30, 2026 from $146 million (23.2% of revenue) and $287 million (23.4% of revenue) for the three and six months ended June 30, 2025, an increase of $126 million and $241 million, respectively. For the three and six months ended June 30, 2026, the increase was primarily driven by the U.S. and International segments, partially offset by the Canada segment. The reduced margin percentage is primarilydue to changes in product and customer mix resulting from the integration of MRC Global's product portfolio into the Company's expanded offering.

Previous wording

Selling, general and administrative (“SG&A”) expenses. SG&A expenses were $243 million forthe three months ended March 31, 2026, compared to$109 million for the corresponding period of 2025, an increase of $134 million. The increasewas primarily drivenby incremental expenses from the MRC Global acquisition completed in the fourth quarter of 2025. SG&A expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as depreciation and corporate selling, general and administrative expenses.

Current wording

Selling, general and administrative (“SG&A”) expenses. SG&A expenses were $238 million and $481 million forthe three and six months ended June 30, 2026, compared to$112 million and $221 millionfor the corresponding periods of 2025, an increase of $126 million and $260 million, respectively. The increasewas primarily drivenby incremental expenses from the MRC Global acquisition completed in the fourth quarter of 2025. SG&A expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as depreciation and corporate selling, general and administrative expenses.

Previous wording

Operating (loss) profit. Our operating loss was $50 millionfor the three months ended March 31, 2026, compared to an operating profitof $29 million for the corresponding period of 2025, a decrease of $79 million primarily due toinventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition.

Current wording

Operating profit (loss). Our operating profit (loss) was $1 million and ($49) millionfor the three and six months ended June 30, 2026, compared to an operating profitof $17 million and $46 million for the corresponding periods of 2025, a decrease of $16 million and $95 million, respectively, primarily due to inventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition.

Previous wording

U.S. Segment—Operating loss was $54 million for the three months ended March 31, 2026, a decrease of $75 million compared to the corresponding period of 2025. Operating profit decreased primarily due to inventory-related transaction charges, our LIFO inventory costing methodology and increases in incremental expenses associated with the MRC Global acquisition.

Current wording

U.S. Segment—Operating loss was $8 million and $62 million for the three and six months ended June 30, 2026, a decrease of $23 million and a decrease of $98 million compared to the corresponding periods of 2025. Operating profit decreased primarily due to inventory-related transaction charges, our LIFO inventory costing methodology and increases in incremental expenses associated with the MRC Global acquisition.

Previous wording

Canada Segment—Operating profit was $1 million for the three months ended March 31, 2026, a decrease of $3 million compared to the corresponding period of 2025. Operating profit decreased primarily due to the decline in revenue discussed above.

Current wording

Canada Segment—Operating profit was $1 million and $2 million for the three and six months ended June 30, 2026, an increase of $1 million and a decrease of $2 million compared to the corresponding periods of 2025. Operating profit increased primarily due to a reduction in SG&A expenses for three months ended June 30, 2026. For the six months ended June 30, 2026 the decline in operating profit was driven by the decline in revenue discussed above.

Previous wording

International Segment—Operating profit of $3 million for the three months ended March 31, 2026, a decrease of $1 million compared to the corresponding period of 2025.

Current wording

International Segment—Operating profit was$8 million and $11 million for the three and six months ended June 30, 2026, an increase of $6 million and an increase of $5 million compared to the corresponding periods of 2025.

Previous wording

Other (expense) income. Other expense was $10 million for the three months ended March 31, 2026 and was primarily attributable to interest expense on borrowings associated with the acquisition of MRC Global completed in the fourth quarter of 2025. Other (expense) income was nil for the corresponding period of 2025.

Current wording

Other (expense) income, net. Other expense was $10 million and $20 million for the three and six months ended June 30, 2026 and was primarily attributable to interest expense on borrowings associated with the acquisition of MRC Global completed in the fourth quarter of 2025. Other (expense) income was nil for the corresponding periods of 2025.

Previous wording

Income tax (benefit) provision. The effective tax rate for the three months ended March 31, 2026, was 26.7% compared to 24.1% for the corresponding period of 2025. In general, the Company's effective tax rate differs from the U.S. statutory rate due to recurring items, such as differing tax rates on income earned in foreign jurisdictions, nondeductible expenses and state income taxes. The effective tax rate for the three months ended March 31, 2026, was higher than the effective tax rate for the three months ended March 31, 2025, primarily due to discrete tax benefits recognized in the quarter which increase the effective tax rate as a result of the loss before income taxes reported in the period.

Current wording

Income tax provision (benefit). The effective tax rate for the three and six months ended June 30, 2026, was (133.3%) and 5.8%, respectively, compared to 17.6% and 21.7%, respectively, for the corresponding periods of 2025. In general, the Company's effective tax rate differs from the U.S. statutory rate due to recurring items, such as differing tax rates on income earned in foreign jurisdictions, nondeductible expenses and state income taxes. The effective tax rate for the three and six months ended June 30, 2026 were impacted by changes in forecasted annual earnings and the geographic mix of those earnings, which resulted in a change in the estimated annual effective tax rate from the estimate used during the first quarter of 2026. The revised estimated annual effective tax rate contributed to income tax expense during the second quarter of 2026 despite a pretax loss for the quarter, resulting in a negative effective tax rate for the three months ended June 30, 2026.

Previous wording

Net (loss) income attributable to DNOW Inc. Our net loss attributable to DNOW Inc. was $44 million for the three months ended March 31, 2026, compared to net income attributable to DNOW Inc. of $21 million for the three months ended March 31, 2025, a decrease of $65 million due to inventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition.

Current wording

Net (loss) income attributable to DNOW Inc. Our net loss attributable to DNOW Inc. was $21 million and $65 million for the three and six months ended June 30, 2026, compared to net income attributable to DNOW Inc. of $14 million and $35 million for the three and six months ended June 30, 2025, a decrease of $35 million and $100 million, respectively, due to inventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition.

Previous wording

Adjusted EBITDA. Adjusted EBITDA, a non-GAAP financial measure, was $39 million (3.3% of revenue) for the three months ended March 31, 2026, compared to $46 million (7.7% of revenue) for the three months ended March 31, 2025. Our Adjusted EBITDA decreased $7 million over the period primarily due toreduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition.

Current wording

Adjusted EBITDA. Adjusted EBITDA, a non-GAAP financial measure, was$60 million (4.6% of revenue) and $99 million (4.0% of revenue) for the three and six months ended June 30, 2026, compared to $51 million (8.1% of revenue) and $97 million (7.9% of revenue) for the three and six months ended June 30, 2025. Our Adjusted EBITDA increased $9 million and $2 million, respectively, over the periods primarily due to increased revenue associated with the MRC Global acquisition partially offset by reduced margins and increased incremental SG&A costs associated with the MRC Global acquisition.

Previous wording

We define Adjusted EBITDA as net (loss) income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction-related charges, long-lived asset impairments (including goodwill and intangible assets), inventory-related charges incremental to normal operations and plus or minus the impact of our LIFO inventory costing methodology. Transaction-related charges include transaction costs, inventory fair value step-up and write-down, retention bonus accruals and integration expenses associated with acquisitions. This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP. A reconciliation of this non-GAAP financial measure, to its most comparable GAAP financial measure, is included below.

Current wording

We define Adjusted EBITDA as net (loss) income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction-related charges, inventory-related charges incremental to normal operations, long-lived asset impairments (including goodwill and intangible assets) and plus or minus the impact of our LIFO inventory costing methodology. Transaction-related charges include transaction costs, inventory fair value step-up and write-down, retention bonus accruals and integration expenses associated with acquisitions. This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP. A reconciliation of this non-GAAP financial measure, to its most comparable GAAP financial measure, is included below.

Previous wording

For the three months ended March 31, 2026 and 2025, stock-based compensation excludes $1 million and less than $1 million, respectively, as such amounts were reported in transaction-related charges.

Current wording

For the three and six months ended June 30, 2026, stock-based compensation excludes $1 million and $2 million, respectively, and for the corresponding periods of 2025, stock-based compensation excludes less than $1 million and $1 million, respectively, as such amounts were reported in transaction-related charges.

Previous wording

Inventory-related transaction charges are included in cost of products. For the three months ended March 31, 2026, inventory-related transaction charges included $41 million of charges related to inventory step-up.

Current wording

Inventory-related transaction charges are included in cost of products. For the three and six months ended June 30, 2026, inventory-related transaction charges includes $3 million and $44 million, respectively, of charges related to inventory step-up and inventory write-downs.

Previous wording

For the three months ended March 31, 2026, other costs included $2 million related to foreign currency losses.

Current wording

For the three and six months ended June 30, 2026, other costs includes $1 million and $3 million, respectively, related to foreign currency losses.

Previous wording

We assess liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. We expect resources to be available to reinvest in existing businesses, strategic acquisitions and capital expenditures to meet short and long-term objectives. We believe that cash on hand, cash generated from expected results of operations and amounts available under our revolving credit facility will be sufficient to fund operations, anticipated working capital needs and other cash requirements, including capital expenditures and our share repurchase program.

Current wording

We assess liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. We expect resources to be available to reinvest in existing businesses, strategic acquisitions and capital expenditures to meet short and long-term objectives. We believe that cash on hand, cash generated from expected results of operations and amounts available under our revolving credit facility will be sufficient to fund operations, anticipated working capital needs and other cash requirements, including capital expenditures and repurchases under our share repurchase program.